Could Ethereum’s 18% Decline Signal a Drop Below the $3,000 Level?
After reaching a recent peak of $3,746 around seven days ago, Ethereum [ETH] has faced significant downward pressure.
During this period, ETH has dropped to a nearby low of $3,157. Despite minor gains, the cryptocurrency continues to experience a decline.
Currently, Ethereum is trading at $3,196, indicating a 2.17% decrease on daily charts. Weekly charts show a 12.67% drop, while monthly charts demonstrate an 18.61% decline.
The decrease seen across Ethereum charts is mainly linked to heightened selling pressure, according to data from CryptoQuant.
Overwhelming Selling Pressure Surrounding Ethereum
Analyses from CryptoQuant suggest that ETH is facing strong selling pressure on the Binance platform. Since November 2024, Ethereum has encountered significant selling pressure on this exchange.
The increasing dominance of selling pressure on Binance is apparent through ETH’s Taker Buy/Sell Ratio, which has remained negative since November 2024, indicating more sell orders than buys.
During this timeframe, the Taker Buy/Sell Ratio has sunk to levels not witnessed since August 2023, reflecting a prevailing bearish sentiment.
While buyers briefly took charge in December, sellers swiftly regained control, reinforcing the downward trend.
The persistent selling pressure in recent months signals a market that is both bearish and cautious.
Conversely, a rising selling ratio could present an opportunity for long-term investors to buy.
Implications on Ethereum Price Trends
The intense selling pressure Ethereum faces has had a detrimental impact on the cryptocurrency’s price movements.
Firstly, the increased selling pressure can be seen as the ETH Chaikin Money Flow (CMF) turns negative, currently at -0.08, indicating seller dominance.
This trend is further reinforced by a declining Relative Strength Index (RSI), nearing oversold levels at 38, indicating sellers’ dominance in the market.
Furthermore, Ethereum’s inflow into exchanges has surged over the past week, a noteworthy transition from -50.77k to 103.77k, suggesting more ETH flowing into exchanges than out of them.
Typically, heightened inflow into exchanges precedes increased selling pressure, as investors usually sell after making these transfers.
Additionally, Ethereum’s Estimated Leverage Ratio (ELR) has steadily risen over the past month. When ELR increases during a downtrend, it signals a bearish sentiment, elevating the risk of a long squeeze.
A further price drop might lead to the liquidation of long positions, triggering a long squeeze and further price declines.
In summary, Ethereum is facing substantial selling pressure as bearish sentiments persist. Should the current market conditions continue, ETH could potentially fall below $3,000, finding support around $2,810 after declining to $3,030.
Nevertheless, if the downtrend weakens and a reversal occurs, Ethereum could reclaim $3,300.